International Association of Bridge, Structural and Ornamental Ironworkers, Local 736 v. E. S. Fox Limited, 1991 CanLII 6130

[1991] OLRB Rep. July 819

2095-90-G; 2260-90-R; 2335-90-G International Association of Bridge, Structural and Ornamental Ironworkers, Local 736, Applicant v. E. S. Fox Limited, E. Spencer Construction Ltd., Respondents; International Association of Bridge, Structural and Ornamental Ironworkers, Local 736, Applicant v. E. S. Fox Lim­ited, E. Spencer Construction Ltd., Respondents; Ironworkers District Council of Ontario and International Association of Bridge, Structural and Ornamental Iron-Workers, Local 736, Applicants v. B. S. Fox Limited, Respondent

BEFORE: N. B. Satterfield, Vice-Chair, and Board Members W. N. Fraser and J. Redshaw.

APPEARANCES: S. B. D. Wahl and B. Doherty for the applicant; W. J. McNaughton and H. Miron for the respondents.

DECISION OF THE BOARD; July 24, 1991

1. These three applications were listed together for hearing by the Board and came on for hearing January 23, 1991 and continued on June 3, 1991. The applications in Files No. 2095-90-G and 2335-90-G are referrals of grievances in the construction industry for final and binding arbitra­tion under section 124 of the Labour Relations Act. The application in File No. 2260-90-R requests a declaration under subsection 1(4) of the Act that the respondents to all three applications be treated as one employer for purposes of the Act.

2. The application in File No. 2095-90-G was made November 8, 1990 and referred a grievance dated October 9, 1990 for arbitration. In the grievance, the International Association of Bridge, Structural and Ornamental Ironworkers, Local 736 ("the union") alleges that E. S. Fox Limited ("Fox") and E. Spencer Construction Limited ("Spencer") carry on associated or related businesses or activities under common direction or control within the meaning of subsection 1(4) of the Act and, therefore, are bound by the collective agreement between the Ontario Erectors Asso­ciation, Incorporated and the International Association of Bridge, Structural and Ornamental Ironworkers and the Ironworkers District Council effective until April 30, 1992 ("the Agree­ment"). The grievance alleges further that Fox and Spencer have violated clause 2.9 of Article 2 -Union Security and Appendix "C" of the Agreement by failing or refusing to pay proper commut­ing allowances. More specifically, it is alleged that the violation has occurred because commuting allowances were calculated from Hamilton City Hall instead of from the Allenburg Post Office, Thorold, Ontario, for work performed on two projects: the Dofasco project in Hamilton and the Hayes Dana project in St. Mary's, Ontario. The Allenburg Post Office is the centre designated by Fox under Appendix "C" of the Agreement for the calculation of commuting and board allow­ances. The grievance alleges further that Fox has violated clause 2.8 of Article 2 by assigning or re­assigning work to a subsidiary or related company for the purpose of defeating the intent or provi­sions of the Agreement. The relief sought by the union includes a request for a declaration that Fox and Spencer be treated under subsection 1(4) of the Act as constituting one employer for pur­poses of the Act and damages for the alleged violations of the Agreement together with interest thereon. Fox and Spencer each filed a reply dated January 22, 1991, to the referral containing the following defence:

At all material times, the union has dealt with E. S. Fox Limited and E. Spencer Construction Limited and [sic] as separate legal entities, each bound by the Ironworkers Provincial Agree­ment, with full knowledge of their relationship.

It is the position of the respondents that the applicant is estopped from asserting that the compa­nies are not separate entities, each bound by the Ironworkers Provincial Agreement.

3. The union made the application under subsection 1(4) of the Act on November 27, 1990 and, as relief, requested that Fox and Spencer be declared as constituting one employer for pur­poses of the Act and, therefore, bound to the Agreement. In support of its request that the Board exercise its discretion under subsection 1(4) to declare Fox and Spencer as constituting one employer for purposes of the Act, the application contains the following statements:

(1) E. S. Fox Limited and the Applicant have been bound by a series of collective agree­ments between the Ontario Erectors Association Incorporated and the International Association of Bridge, Structural and Ornamental Ironworkers and the Ironworkers District Council of Ontario in effect from time to time. E. S. Fox Limited is a member of the Ontario Erectors Association.

(2) Within the territorial jurisdiction of the Applicant Ironworkers, Local 736, E. 5. Fox Limited has selected the Allenburg Post Office as its "centre" of field operations and paid Commuting Allowance in accordance with Appendix "C" to the operative Col­lective Agreement.

(3) E. Spencer Construction Ltd. is currently involved in two construction projects as fol­lows:

(i) Dofasco Project

(ii) Hayes Dana Project St. Mary's, Ontario

Fox and Spencer each filed a reply to the application. Each reply was dated January 22, 1991, the day before the hearings began. Schedule "A" to Spencer's reply contained the following statement in defence of the application:

Schedule "A"

E. Spencer Construction Limited was incorporated January 22, 1973 as a numbered company. The name was changed to E. Spencer Construction Limited by Supplementary Letters Patent dated June 16, 1975.

E. S. Fox Limited and E. Spencer Construction Limited carry on associated or related business activities under common direction and controls.

E. S. Fox Limited subcontracts Ironworkers labour in the Hamilton area to E. Spencer Con­struction Limited which employ members of the Ironworkers union, called from the local union hall. E. Spencer Construction Limited is not signatory to any collective agreement. At all times, E. Spencer Construction Limited abided by the then current Ironworkers collective agreement in the Hamilton area. Ironworkers were paid on cheques issued by E. Spencer Construction Limited and all dues, and benefit remissions to the union were made by E. Spencer Construc­tion Limited.

At all times, E. Spencer Construction Limited operated openly, with the knowledge of the union of its relationship with E. 5. Fox Limited. Direct supervision was done by members of the union, laid off by E. S. Fox Limited and then hired, through the local union hall as supervisor for E. Spencer Construction Limited. Supervision was paid by E. Spencer Construction Limited and dues and benefits remitted to the local union by E. Spencer Construction Limited.

It is the position of E. Spencer Construction Limited that it is bound by the Ironworkers Provin­cial Agreement.

In an apparent reference to those statements, Fox's reply submits that the union is not entitled to the relief it is seeking in the application because:

The parties are bound by the Provincial Ironworkers agreement with the Ontario Erectors Asso­ciation effective until April 30, 1992.

4. The application in File No. 2335-90-G was made December 4, 1990 by the Ironworkers District Council of Ontario ("the District Council") and the union and refers a grievance dated November 26, 1990 for final and binding arbitration. In broad terms, the grievance alleges that, unless Spencer is found to be a subsidiary or related employer to Fox within the meaning of subsec­tion 1(4) of the Act and/or Article 2 of the Agreement, Fox has violated the Agreement by subcon­tracting to Spencer the performance of work covered by the Agreement at the Dofasco and Hayes Dana projects referred to in the first grievance and, as a result, has failed to pay the proper rates of wages, overtime, vacation pay, holiday pay, commuting allowance and contributions to the various trust funds established pursuant to the terms of the Agreement. The relief sought includes damages for those alleged violations.

5. The application under subsection 1(4) of the Act was made after a hearing into the first grievance referral had been adjourned on consent. The union requested that the two applications be listed together for hearing. The applicants in File No. 2335-90-G made the same request. All three applications were heard together on January 23rd and June 3, 1991. For reasons given orally on the first day of hearing, the Board ruled that it would admit evidence concerning an alleged arrangement between the union and Spencer for the union to refer ironworkers for employment by Spencer and much of the viva voce evidence relates to that arrangement. The facts in these applica­tions are largely undisputed and the Board's findings of fact have been made based on the uncon­tested factual content of the parties' representations on the preliminary evidentiary issue, the admissions in the replies to the grievance referred in File No. 2095-90-G and the application under subsection 1(4) of the Act, and from the evidence of the three witnesses who testified in the pro­ceedings. They were Henry Miron, mechanical manager for Fox and construction manager for Spencer, Brian Doherty, a business representative of the union and Tim Densmore, business manager of the union. All three were credible witnesses, although there was some conflict in the way they described the same events, largely, meetings and discussions between representatives of the union, Fox and Spencer. Where their testimony differed in that respect, the Board's conclusions of fact are based on what was reasonably probable in all of the circumstances. The facts are as fol­lows.

6. Fox and Spencer carry on associated or related activities or businesses under common control or direction within the meaning of subsection 1(4) of the Act. Fox is bound together with the union and the District Council to the Agreement and to a series of predecessor collective agreements. Fox is located in Welland, Ontario, and has designated Allenburg Post Office, Tho­rold, for the duration of the Agreement, as the centre for purposes of calculating commuting and board allowances pursuant to clause 2.9 and Appendix "C" of the Agreement. Spencer is not sig­natory to any collective agreement with the union or the District Council or to any collective agree­ment binding on either of them.

7. Spencer is an Ontario corporation with a registered address of 1 King Street West, Hamilton, Ontario. Since approximately the beginning of 1987, Spencer has had an arrangement with the union to employ ironworkers referred by the union on request from Spencer. They were referred in accordance with the terms of the Agreement. Foremen and general foremen were "name hired" in accordance with the Agreement. Spencer named the persons whom it wished the union to refer as foremen and general foremen. They were always ironworkers employed by Fox. Fox laid them off so that they could go on the union's out-of-work list and be referred from that list to Spencer on Spencer's request. Spencer's name requests for foremen or general foremen were always filled by the union as requested by Spencer. Spencer paid the ironworkers, including fore­men and general foremen, the terms and conditions prescribed by the Agreement or its predeces­sors. Commuting and board allowances were calculated based on Hamilton City Hall, the centre applicable to Hamilton area contractors bound to the Agreement. The ironworkers' wages and related amounts were paid by cheque from Spencer. Similarly, all contributions required under the Agreement for welfare and pension benefits, vacation and holiday pay, union dues and like contri­butions were made in Spencer's name and remitted on Spencer's cheques.

8. The arrangement between the union and Spencer was first entered into between Miron on behalf of Spencer and Ken Childs, the union's business manager at the time. Under its constitu­tion, the business manager is the union's senior officer responsible for its day-to-day operations. The arrangement continued to be honoured by Stoney Isaacs who succeeded Childs as business manager of the union. Miron did not expressly inform either Childs or Isaacs that Spencer was related to Fox. He simply identified Spencer as a company based in Hamilton which wanted to do business in the Hamilton area employing ironworkers and supplied them with Spencer's address and telephone number. Calls to that number reached a telephone answering service which referred them to Miron at Fox's office in Welland. He did not inform either Childs or Isaacs of that arrangement. Isaacs was succeeded in office by Tim Densmore. The evidence does not reveal when Densmore became business manager, but it is reasonable to infer from all of the evidence that he was business manager when Spencer began to execute the work on the Dofasco and Hayes Dana projects. Spencer only performs iron work and, as its construction manager, Miron is ultimately responsible for the work performed by the ironworkers employed by Spencer. As mechanical man­ager for Fox, he is responsible for the work performed by ironworkers, boilermakers and mill­wrights.

9. Spencer has performed ironwork on six projects under the arrangement with the union, including the Dofasco and Hayes Dana projects which are the subject of the grievances. With one exception, the work was performed under subcontracts in the form of purchase orders from Fox.

Fox has its business office in Welland. Since Spencer made the arrangement with the union, it has not performed iron work in the Niagara Peninsula area. Nor has Fox performed iron work in Ham­ilton and the surrounding area during this same period. If work requiring iron work labour is to be done in the Hamilton area, it is done by Spencer. If such work is to be done in the Niagara Penin­sula area, it is done by Fox. The one exception to Spencer performing iron work only under sub­contract from Fox on Fox's construction projects is the Hayes Dana project. That project was per­formed by Spencer for Warner & Bouw Welding & Fabricating Ltd. under purchase order from Warner & Bouw to Spencer. Fox had no work on the Hayes Dana project and Spencer took the work at the request of Warner & Bouw.

10. All of the work performed by Spencer under its arrangement with the union is work which, if it had been performed by ironworkers employed directly by Fox, would have been cov­ered by the Agreement. Spencer does not bid to Fox for the work which it does for it. The work is priced by Fox's estimators based on the work being performed by Spencer using Hamilton as its base of operations for purposes of calculating commuting and board allowances. Fox carries that price, with or without a mark-up, in its bid to its client. Miron and the estimators are paid by Fox, not Spencer, although Miron believes that a charge is made by Fox to Spencer for their services. The price quoted on the purchase order from Fox to Spencer for iron work to be performed by Spencer for Fox is for Spencer's cost of performing that work.

11. Brian Doherty first became aware of Spencer and the fact that Spencer might be related to Fox in 1988 when Spencer was performing ironwork for Fox at the Toyota plant in Cambridge. Doherty did nothing at the time because the job was the responsibility of another business repre­sentative of the union. Nor did he do anything about the Fox/Spencer relationship after he took over responsibility for the project when it was about seventy per cent completed. In August 1990 Doherty learned that Fox was going to be installing some overhead cranes at Dofasco in Hamilton. In expectation that Spencer would be doing the iron work on the project, he called Miron and requested a meeting about it. A meeting was held at Fox's office in Welland involving Doherty, Miron, Miron's boss and one or two other Fox officials. While the Board is satisfied on the evi­dence that the meeting was held during August, the evidence does not disclose the date of the meeting. Nor does the evidence disclose when Fox and Spencer contracted for the work on the Dofasco and Hayes Dana projects relative to the meeting with Doherty. Doherty told them that the union believed Spencer and Fox to be one and the same company and, if they were, the union would not go along with Spencer being used to do work for Fox using Hamilton City Hall as the centre for calculating commuting allowance under clause 2.9 and Appendix "C" of the Agreement. He told Miron that, in his view, Spencer and Fox could not have two different centres for that pur­pose. Doherty filed the grievance referred to in the first application when he learned that the com­muting allowance for ironworkers employed by Spencer was being calculated based on Hamilton City Hall and not on Allenburg Post Office in Thorold.

12. The parties agree that the Board should determine only whether Spencer and/or Fox are liable for damages for a violation of the Agreement and, if so, remain seized with respect to the amount of damages.

13. On these facts, counsel for the respondents submits that the Board should find that Spencer and the union, by virtue of their conduct under the arrangement for the union to supply Spencer with ironworkers, are bound together to the Agreement and, therefore, there has been no violation of the Agreement by either Spencer or Fox. Counsel argues that Spencer has complied with the full terms of the Agreement whenever it has employed ironworkers and the union has dealt with Spencer as though it were bound to the Agreement and its predecessors. The union also has accepted that the ironworkers referred to Spencer under the Agreement have been correctly compensated and has accepted from Spencer the remittance of union dues and contributions to the various funds established under the Agreement as though Spencer were bound to the Agreement and its predecessors. Therefore, the union should not be allowed now to claim that Spencer is not bound to the Agreement. In the alternative, counsel submits that, should the Board find Spencer is not bound to the Agreement, the Board should exercise its discretion under subsection 1(4) of the Act to declare that Fox and Spencer are not to be treated as one employer for purposes of the Act because the union has treated them as separate entities and employers for at least three years with the full knowledge that they carry on related activities or businesses under common control or direction. Thus, according to counsel, the union ought not be allowed now to assert that Spencer and Fox should be treated as one employer.

14. For similar reasons, even if Spencer and/or Fox have violated the Agreement, which counsel denies, he contends that the union should be estopped because of its own conduct from claiming damages for Spencer and Fox having proceeded according to Spencer's arrangement with the union. In the alternative, should the Board declare that Fox and Spencer are to be treated as constituting one employer for purposes of the Act and that they have violated the Agreement, the union is estopped from claiming damages because the prerequisites for applying the doctrine of estoppel were established during one of the predecessor collective agreements to the Agreement and, therefore, the estoppel should run until the expiry of the Agreement. Counsel did not refer the Board to any particular award as authority for that proposition, but relied generally on that body of arbitral awards which, he submits, are authority for that proposition.

15. The argument of counsel for the union and the District Council as to the conclusions which the Board should reach on those facts runs as follows. There is no collective agreement between Spencer and the union because there is nothing in writing signed by the parties which could be construed to be a collective agreement within the meaning of the Act. In this respect counsel relies on Ecodyne Limited, [1979] OLRB Rep. July 629. With respect to the application for relief under subsection 1(4) of the Act, the Board should exercise its discretion to declare Fox and Spencer to be treated as constituting one employer for purposes of the Act because Fox has used the arrangement between Spencer and the union to avoid having payment of commuting allowance on the Dofasco and Hayes Dana projects calculated from the Allenburg Post Office in Thorold and, because Fox and Spencer are related employers within the meaning of subsection 1(4). Fox's use of that arrangement to avoid payment of the proper commuting allowance under the agreement is a violation of subsection 146(2) of the Act which prohibits employers and unions bound to a provincial agreement from entering into any other agreement or arrangement. There­fore, Fox should not be allowed to rely on an unlawful arrangement to prevent the Board from exercising its discretion under subsection 1(4) to declare that Fox and Spencer be treated as consti­tuting one employer.

16. With respect to the claim that the union had knowledge of the relationship between Fox and Spencer and failed to act on it, counsel asserts that Doherty only became aware of the relation­ship near the end of the Toyota project and was unaware that Spencer's ironworkers were not being paid commuting allowance calculated from the Allenburg Post Office. The Dofasco and Hayes Dana projects were the first opportunities for Doherty to pursue relief under subsection 1(4) of the Act and, when he learned that commuting and board allowances were being calculated based on the Hamilton City Hall and not the Allenburg Post Office in Thorold, he filed the union's grievance in File No. 2095-90-G and its request for relief under subsection 1(4) of the Act. Therefore, the union has not slept on its rights, rather has acted to protect them at the earliest opportunity. But, even if the Board finds that the union has not been diligent in acting upon its knowledge, according to counsel, that conclusion should not operate to prevent the Board from issuing a one employer declaration under subsection 1(4). He submits that the union is entitled at least to relief from the date when it first moved to end the arrangement with Spencer by warning Fox and Spencer that they could not use two centres for the calculation of commuting and board allowances and by asserting its rights under the Agreement as soon as it learned that Spencer was calculating commuting and board allowances based on Hamilton City Hall and not the Allenburg Post Office for the Dofasco and Hayes Dana projects. In this respect, counsel for the union relies on the Board's decision in KNK Limited, [1991] OLRB Rep. Feb. 209.

17. With respect to the two grievances, counsel for the union argues that, if the Board declares that Spencer and Fox are to be treated as constituting one employer for purposes of the Act, the payment of commuting and board allowances calculated from the Hamilton City Hall instead of the Allenburg Post Office in Thorold on the Dofasco and Hayes Dana projects is a clear violation of clause 2.9 and Appendix "C" of the Agreement by Fox and Spencer. On the other hand, if the Board does not declare Fox and Spencer as constituting one employer for purposes of the Act, he submits that Spencer has no bargaining relationship with the union and, therefore by subcontracting the ironwork on the Dofasco project to Spencer, Fox has violated clause 2.7 of the Agreement which requires an employer bound to it to subcontract work covered by the Agreement only to employers in contractual relationships with the union. Fox's subcontract to Spencer is also a violation of clause 2.8 because it constitutes an assignment or re-assignment of work to a related employer for the purpose of defeating the intent or provisions of the Agreement. Since the viola­tion of clause 2.8 has resulted from Fox's attempt to avoid payment of proper commuting and board allowances, its actions constitute a violation of clause 2.9 and Appendix "C" of the Agree­ment, for which the measure of damages would be the difference in the amount actually paid and the amount which should have been paid by calculating the allowances from the Allenburg Post Office in Thorold. Counsel argues also that the Warner & Bouw contract with Spencer is a viola­tion of clause 2.8 because it constitutes an assignment or re-assignment of work from Fox to Spencer. Counsel argues further that the measure of damages for the violation of clause 2.7 would be damages calculated in accordance with the principles set out in Re Blottin Drywall Contractors Ltd. (1973) 1973 CanLII 2044 (ON LA), 4 L.A.C (2d) 254 (O'Shea), reviewed 1974 CanLII 751 (ON HCJDC), 48 D.L.R. (3d) 191, reviewed 75 C.L.L.C. 14,295 (C.A.), leave to appeal to S.C.C. refused November 17, 1975.

18. The relevant sections of the Labour Relations Act are subsections 1(1), 1(4) and 146(2), each of which reads as follows:

1.-(1) In this Act,

(e) "collective agreement" means an agreement in writing between an employer or an employers' organization, on the one hand, and a trade union that, or a council of trade unions that, represents employees of the employer or employees of members of the employers' organization, on the other hand containing provisions respecting terms or conditions of employ­ment or the rights, privileges or duties of the employer, the employers' organization, the trade union or the employees, and includes a provincial agreement;

(4) Where, in the opinion of the Board, associated or related activities or businesses are carried on, whether or not simultaneously, by or through more than one corporation, individual, firm, syndicate or association or any combination thereof, under common control or direction, the Board may, upon the application of any person, trade union or council of trade unions con­cerned, treat the corporations, individuals, firms, syndicates or associations or any combination thereof as constituting one employer for the purposes of this Act and grant such relief, by way of declaration or otherwise, as it may deem appropriate.

146.-(2) On and after the 30th day of April, 1978 and subject to sections 139 and 145, no person, employee, trade union, council of trade unions, affiliated bargaining agent, employee bargain­ing agency, employer, employers' organization, group of employers' organizations or employer bargaining agency shall bargain for, attempt to bargain for, or conclude any collective agree­ment or other arrangement affecting employees represented by affiliated bargaining agents other than a provincial agreement as contemplated by subsection (1), and any collective agree­ment or other arrangement that does not comply with subsection (1) is null and void.

19. The relevant clauses of the Agreement are as follows: ARTICLE 2- UNION SECURITY

2.7 An Employer agrees not to subcontract or sublet any work covered by this Agree­ment to any person, firm or corporation which is not in contractual relationship with the International Association of Bridge, Structural and Ornamental Ironworkers or Local union thereof.

2.8 An Employer also agrees not to assign or reassign work to any subsidiary, related company, or trade for the purpose of defeating the intent or provisions of this Collec­tive Agreement.

2.9 An Employer will make payment to employees of any applicable commuting, travel, board, transportation or room and board allowances as set out in Appendix "C".

APPENDIX "C"

Commuting, Travel and Board Allowance is not payable, regardless of the distance to the job site when the employee leaves his home base and returns the same day in a Company vehicle and is being paid his applicable wage rate.

All distances in this Appendix will be measured by the most direct route accessible by passenger automobile.

1. COMMUTING ALLOWANCE

(a) Commuting allowances will be paid from the appropriate centres:

Local 736 Hamilton City Hall, Waterloo-Wellington Airport Tower in Kitchener Area, Allen-burg Post Office.

NOTE: An employer based in either Kitchener or the Niagara Peninsula may select as his appropriate centre any of these three but this selection will not be changed during the term of the Agreement.

20. These applications raise the following issues for decision by the Board:

(1) Is Spencer bound to the Agreement because of the way it and the

union dealt with the employment of ironworkers by Spencer under the arrangement between them?

(2) If not, should the Board declare Fox and Spencer to be treated as constituting one employer for purposes of the Labour Relations Act?

(3) If the Board declares that Fox and Spencer are to be treated as constituting one employer for purposes of the Act, have Fox and Spencer as a single employer breached the Agreement?

(4) If the Board does not declare that Fox and Spencer are to be treated as constituting one employer for purposes of the Act, has Fox breached one or more of clauses 2.7, 2.8 or 2.9 of the Agreement?

(5) If the Board finds that Fox and Spencer as one employer, or Fox alone, has breached the Agreement, is the union estopped from claiming damages?

21. The claim that Spencer is bound to the Agreement is raised as a defence against the union's request for a subsection 1(4) declaration and to the allegation that Fox has breached the Agreement. Insofar as that issue affects the exercise of the Board's discretion under subsection 1(4), the Board must determine whether Spencer is bound by the Agreement in accordance with the Act. Subsection 1(1)(e) requires a collective agreement to be in writing and signed by both par­ties. The union and Spencer have not signed any document or documents which would bind them to the Agreement. The fact that they have applied the terms and conditions of the Agreement to the ironworkers employed by Spencer does not confer bargaining rights on the union. In this respect, see the Board's decision in Ecodyne Limited, supra, and the cases referred to therein at paragraph 28. Therefore, the Board finds that Spencer is not bound to the Agreement and the union has no bargaining rights for ironworkers employed by Spencer.

22. If the union does not have bargaining rights for ironworkers employed by Spencer pur­suant to the Agreement, should the union be able to acquire those rights by means of a Board dec­laration pursuant to subsection 1(4) of the Act that Spencer and Fox be treated as constituting one employer for purposes of the Act? Fox and Spencer say not because the union has treated them as separate employers since the start of the arrangement between Spencer and the union and Fox and Spencer have conducted themselves accordingly respecting the performance of ironwork. More particularly, Fox and Spencer have relied on the union's acceptance of its arrangement with Spencer to bid the Dofasco and Hayes Dana jobs based on commuting and board allowances calcu­lated from the Hamilton City Hall. Therefore, it would be a serious financial detriment to Fox and Spencer were the Board to permit the union now to withdraw from the arrangement and plead for relief pursuant to subsection 1(4) of the Act.

23. The Board understands counsel for Fox and Spencer to be saying that the union is estopped by its conduct from relying on subsection 1(4) for relief, not that the Board is estopped from applying subsection 1(4). Even if the Board has misunderstood that aspect of their counsel's argument and assuming the existence of the prerequisites for applying the doctrine of estoppel, the Board would not be estopped from making a one employer declaration. This is because "... the doctrine of estoppel cannot be evoked to prevent the operation of a public statute such as the Labour Relations Act...". See J. D. S. Investments, supra, at paragraph 10 and the authorities referred to therein. That is not to say, however, that the Board cannot rely on the doctrine of estoppel or on conditions akin to estoppel in the exercise of its discretion to make or not make a one employer declaration under subsection 1(4) of the Act. Where the prerequisites which give the Board that discretion have been satisfied, the question is always whether the Board ought to make the declaration. The existence of estoppel-like conditions is only one of the circumstances which the Board might weigh in deciding the exercise of its discretion. That exercise always involves a balancing of the labour relations purpose of subsection 1(4) to preserve bargaining rights with the potential prejudice to a respondent in making the declaration and to an applicant in not making it.

24. On the basis of the respondents' admission that Fox and Spencer are related employers under common control or direction and on all of the evidence before the Board, the Board finds that Fox and Spencer are related employers within the meaning of subsection 1(4) of the Act and the only question is how the Board should exercise its discretion. This case is different in one respect from many of the applications under subsection 1(4) which come before the Board in that Fox has not used Spencer as a means of ignoring the Agreement. Spencer has applied all of the conditions of the Agreement as though it was bound by it. Nonetheless, Fox's use of Spencer and Spencer's arrangement with the union, has enabled Fox to calculate the cost of commuting and board allowances, for the purpose of bidding and executing projects, from the most advantageous of Hamilton City Hall or the Allenburg Post Office, instead of from the Allenburg Post Office in every case. Clearly, Fox's use of Spencer has enabled Fox to circumvent the Agreement and, in that respect, to erode the union's bargaining rights under the Agreement. Should the Board declare that Fox and Spencer are to be treated as constituting one employer for purposes of the Act, there is no doubt that, together, they have breached clause 2.9 and Schedule "C" of the Agreement by calculating commuting and board allowances from Hamilton City Hall instead of from the Allenburg Post Office in Thorold.

25. While Miron did not explicitly inform the union of the relationship of Spencer to Fox, the union did not seriously contend that it was not aware of the relationship from the outset of the arrangement. Having regard to Miron's responsibility for the work of the union's ironworkers employed by both Fox and Spencer and the fact that Spencer's foremen and general foremen were always ironworkers laid off by Fox so that they could be referred by the union to Spencer, the Board is satisfied that the union knew of the relationship between Fox and Spencer when it referred ironworkers to Spencer and received remittances from it for union dues and employer contributions to various funds under the Agreement. Therefore, the question for the Board is whether the union's delay in seeking remedy under subsection 1(4) of the Act should cause the Board not to declare that Fox and Spencer be treated as constituting one employer for purposes of the Act, as counsel for the respondents contends or simply affects the effective date of the Board's declaration, as union counsel contends.

26. The Board in KNK Limited, supra, considered those choices in a substantially different fact situation. After reviewing at length the development of the Board's application of subsection 1(4) over the years, the Board expressed the view at paragraph 57 that:

……where a trade union has established the legal requirements for a section 1(4) declaration, as well as the 'mischief' which such declaration was designed to prevent, a declaration should ordinarily be made unless there is either particular prejudice or compelling policy reasons for not doing so. Those policy reasons should be rooted in labour relations rather than commercial law considerations, and the alleged prejudice should involve something more than having to apply a collective agreement which the related employer has disregarded in the past.

The Board in that case went on to observe that, where the union's inaction was tantamount to abandonment of its bargaining rights, the Board might dismiss the application, but, "... where the balance of labour relations interests can be achieved by limiting the retrospective effect of a decla­ration ..., the Board should consider that option rather than dismissing the application alto­gether.".

27. Although the erosion of bargaining rights in KNK Limited was substantially greater than in the instant case, and the union here actively contributed to the mischief from which it now seeks relief, the Board agrees with and adopts both propositions expressed in the above quotations from that decision. First, that "... [a one employer] declaration should ordinarily be made unless there is either particular prejudice or compelling policy reasons for not doing so.". Second, that, while the Board might dismiss an application where "... a union s inaction was tantamount to abandonment of its bargaining rights," the Board should consider the option of limiting the retro­spective effect of a declaration rather than dismissing the application altogether "... where the bal­ance of labour relations interests can be achieved ..." by so doing. Therefore, the Board will exam­ine whether the declaration ought not be made because of "particular prejudice" or "compelling policy reasons"; or whether the application ought to be dismissed because the union's inaction was tantamount to an abandonment of its bargaining rights; and, if neither result is appropriate, whether making a declaration but limiting its retrospective effect would balance the labour rela­tions interests at play in the application.

28. There is no doubt here that, by making the arrangement with Spencer and letting it operate for some three years, the union has contributed to the creation of the "mischief' from which it now seeks relief via a one employer declaration from the Board. The arrangement allowed Fox to enjoy the flexibility of having two centres within the union's geographic jurisdiction from which to calculate commuting and board allowances, a flexibility which was not available to it as a single employer bound to the Agreement. When Doherty met with Miron and other Fox officials and warned them that the union would not accept Fox and Spencer using two different centres if they were in fact one and the same employer, it was a clear warning to Fox and Spencer that the union intended to prevent them from continuing to operate in that manner. Fox and Spencer chose to ignore the warning and when the union learned that commuting and board allowances for the Dofasco and Hayes Dana projects were not being calculated from the Allenburg Post Office, it began these proceedings by serving Fox and Spencer with the grievance dated October 9, 1990, including the claim that they were related employers within the meaning of subsection 1(4) of the Act.

29. What, then, is the potential prejudice to Fox and Spencer should the Board declare that they be treated as constituting one employer for purposes of the Act, and what is the potential prejudice to the union if the Board does not make the declaration? As the Board has noted earlier, this application is unlike many others made under subsection 1(4) of the Act in that the related non-union employer has not been used by the employer with the collective bargaining obligations to totally circumvent those obligations. That situation is reflected in the potential prejudice to the parties of the Board making or not making a one employer declaration.

30. For Fox, the potential prejudice includes the risk of being liable for damages for breach of clause 2.9 of the Agreement should the union succeed in its claim for damages under the first grievance. That risk would remain, however, even were the Board to not make a one employer declaration. That is because Fox would still have to defend itself against the union's allegations that, when Spencer performed ironwork for Fox on the Dofasco and Hayes Dana projects, Fox violated clauses 2.7 and 2.8 of the Agreement and that the measure of damages for which Fox would be liable would include underpayment of commuting and board allowances because they were calculated from Hamilton City Hall instead of the Allenburg Post Office. The union is not claiming any damages for projects performed under the arrangement with Spencer prior to the Dofasco and Hayes Dana projects, so there is no potential prejudice to Fox respecting earlier projects. Prospectively there is potential prejudice to Fox in the loss of the flexibility of choosing to subcontract to Spencer when it would be to Fox's advantage to have commuting and board allow­ances on its projects calculated from Hamilton City Hall instead of the Allenburg Post Office. The reality is, however, that the union would not likely continue to refer ironworkers for employment by Spencer if the one employer declaration is not made.

31. The potential prejudice for Spencer flowing from a one employer declaration would be the loss of its separate identity as an employer of ironworkers. But that would be the direct conse­quence of Fox's use of Spencer to give Fox a second centre from which to calculate commuting and board allowances. In any event, every non-union employer captured by a subsection 1(4) declara­tion finds its identify submerged in that of the related employer with the collective bargaining obli­gations. Not a surprising result considering that the purpose and effect of a subsection 1(4) declara­tion is to eliminate the labour relations significance of a related non-union employer. The union would become bargaining agent for ironworkers employed by Spencer and Spencer would be treated for all purposes under the Agreement as though it was Fox. Spencer also would be at risk, together with Fox, of being liable for damages for breach of clause 2.9 of the Agreement should the union's claim succeed. Absent the one employer declaration, Spencer would not be bound to the Agreement and, unlike Fox, would not be at risk of being liable for damages for breaching the Agreement.

32. Should the Board not make a one employer declaration, the potential prejudice for the union lies in the continuing presence of Spencer as a separate employer of ironworkers not bound to the Agreement. While, by the simple expedient of not referring ironworkers for employment by Spencer, the union can readily prevent Fox from using Spencer as it has, Spencer's continued exis­tence as an employer related to Fox within the meaning of subsection 1(4) and not bound to the Agreement would subject the union to the risk that Fox again might use Spencer to avoid obliga­tions under the Agreement.

33. It seems then that the only potential prejudice to Fox and Spencer flowing from a one employer declaration which might be attributed to the union's inaction is the prejudice of having to apply a term of the Agreement which, together, they have circumvented for the past three years and the consequent risk of damages. The risk of damages for breach of clause 2.9 of the Agree­ment could have been avoided or mitigated if Fox and Spencer had heeded Doherty's warning. The prejudice to the union, on the other hand, if the Board does not declare Fox and Spencer to be treated as constituting one employer, would be the risk that Fox might use Spencer again to avoid any of its obligations under the Agreement. That is the type of mischief which subsection 1(4) of the Act was designed to prevent. Where, as here, actual mischief already has been demon­strated, the potential prejudice to the union outweighs the potential prejudice to Fox and Spencer of having to comply with the Agreement, and so end the mischief, and of being at risk of damages because of the mischief which they created. There is no compelling policy reason for not making a one employer declaration. Nor can it be said that the union's inaction respecting the breach of the Agreement amounts to abandonment of its bargaining rights such that the Board ought to dismiss the application.

34. Therefore, in the Board's view, these are not circumstances in which the Board ought to either withhold its declaration or dismiss the application. On the other hand, since the union's own conduct in entering into its arrangement with Spencer contributed to Fox's opportunity to avoid its obligation under clause 2.9 of the Agreement, the Board is also of the view that its declaration ought not to have retrospective effect from the start of the relationship between Fox and Spencer as it normally would. See J. D. S. Investments Ltd., [1981] OLRB Rep. March 294. When the union filed its grievance against Fox and Spencer on October 9, 1990, relying on the assertion that Fox and Spencer were related employers pursuant to subsection 1(4) of the Act, they were put on notice that they might be liable for damages under the Agreement if the union made out its case before the Board, unless they acted to mitigate their damages. Therefore, it seems to the Board that, to give the union relief in the form of a subsection 1(4) declaration effective from the date when Fox and Spencer were served with the union's grievance would be an appropriate balancing of the labour relations interests in the circumstances of this case.

35. Therefore, the Board declares that E. S. Fox Limited and E. Spencer Construction Ltd. are to be treated as constituting one employer for purposes of the Labour Relations Act effective from October 9, 1990.

36. With respect to the issue of whether Fox and Spencer are liable for damages, the evi­dence supports the conclusion that work was performed on both the Dofasco and Hayes Dana projects after October 9, 1990. It is admitted by Spencer that Hamilton City Hall was used as the base for determining whether commuting and board allowances were to be paid on the two projects, and not the Allenburg Post Office. To that extent, as the Board noted earlier, there has been a clear breach by Fox and Spencer of clause 2.9 and Schedule "C" of the Agreement as alleged in the October 9, 1991 grievance. The remaining question is whether the union is estopped from claiming any damages arising out of the breach, as contended by counsel for Fox and Spencer.

37. The Board accepts that there are two bodies of arbitral jurisprudence respecting when estoppel ends, as argued by counsel. However, assuming without finding that the facts establish the prerequisites for estoppel, and without attempting to analyze the jurisprudence any more than the parties did in arguing for either proposition, the Board is satisfied on the facts here that the estop­pel must end coincident with its declaration that Fox and Spencer are to be treated as constituting one employer for purposes of the Act. This is because the continuation of an arrangement between the union and Spencer, now that both Spencer and Fox are bound to the Agreement, which would allow Fox to use the Hamilton City Hall and the Allenburg Post Office for the calculation of com­muting and board allowances, instead of the Allenburg Post Office, would be an "... arrangement affecting employees represented by affiliated bargaining agents other than a provincial agree­ment ..." within the meaning of subsection 146(2) of the Act. The union is an affiliated bargaining agent bound by the Agreement and Fox and Spencer together are an employer bound by the Agreement. Subsection 146(2) prohibits them from entering into such an arrangement.

38. Therefore, E. S. Fox Limited and E. Spencer Construction Ltd. are liable for any dam­ages suffered by the International Association of Bridge, Structural and Ornamental Ironworkers, Local 736 and its members as a result of the employer's violation of clause 2.9 and Schedule "C" of the collective agreement between the Ontario Erectors Association, Incorporated and the Interna­tional Association of Bridge, Structural and Ornamental Ironworkers and the Ironworkers District Council effective until April 30, 1992. The liability for damages will run from October 9, 1990. However, if Fox and Spencer contracted for work on the Dofasco and Hayes Dana projects prior to Doherty's warning in August 1990 that the union would not accept them using two centres for the calculation of commuting and board allowances, they reasonably might have done so in reli­ance on Spencer's arrangement with the union. In that event, therefore, no liability for damages would attach to iron work performed on those projects which was contracted for prior to the August meeting with Doherty. In accordance with the agreement of the parties, the Board remains seized respecting the amount of damages owing to the union and its members should the parties be unable to agree on it.

39. In the result, the allegation in Board File No. 2095-90-G that Fox breached clause 2.8 of the Agreement and in Board File No. 2335-90-G that it breached clauses 2.7, 2.8 and 2.9 are redundant. Therefore, the application in File No. 2335-90-G is dismissed and the application in File No. 2095-90-G is dismissed insofar as it alleges a breach of clause 2.8 of the Agreement.

40. In summary, in the application in Board File No. 2260-90-R, the Board has declared that E. S. Fox Limited and E. Spencer Construction Ltd. are to be treated as constituting one employer for purposes of the Labour Relations Act pursuant to subsection 1(4) of the Act effective October 9, 1990; has found that they have breached clause 2.9 and Schedule "C" of the collective agreement between the Ontario Erectors Association, Incorporated and the International Associa­tion of Bridge, Structural and Ornamental Ironworkers and the Ironworkers District Council effec­tive until April 30, 1992 as alleged in File No. 2095-90-G; has dismissed the application in File No. 2335-90-G; and, has dismissed the application in File No. 2095-90-G insofar as it alleges that E. S. Fox Limited has breached clause 2.8 of the collective agreement. The Board remains seized respecting the amount of damages owing, if any, for the breach of clause 2.9 and Schedule "C" of the collective agreement.